Adam and John owned AJ's Pizza. When they opened up the shop Adam spent $25,000 of his own money to buy the kitchen equipment they would need. John spent $5,000 of his money on rent and security deposit for the shop and $10,000 on advertising, website and office equipment for the business. Their goal was to share all profits and losses equally and also make all business decisions together and they never formalized any agreement between the two of them. They opened up the shop and things went very well for them. Before long they needed to buy a second oven and a second deep fryer. The two went to the bank together and applied for a small business loan on behalf of AJ's so they could purchase the two items. The loan was approved for $15,000 and they bought the equipment for the shop. Adam's wife accepted a job in another state, so Adam decided to sell his one half interest in the shop. Luckily for Adam, his brother in law, Shawn, had always wanted to own a pizza shop but never had the means to do so. Adam sold Shawn his interest in the business for $40,000 and would allow him to make 40 payments of $1,000/month to complete the purchase. John knew nothing of this until one morning he entered the shop to see Shawn sitting at Adam's desk looking through purchase orders for supplies. Shawn greeted John by saying "Howdy Pardner! This is going to be fun." John knew Shawn, but not that well. He was not sure if he wanted to risk his livelihood on an unknown variable like Shawn.

What is John's best defense to avoid being in business with Shawn?

Select one:

a.John did not agree to the sale price of $40,000.

b.Shawn's time, energy and skill devoted to the business will never equal John's, so they can never be equal.

c.Adam's departure from the partnership was a breach of his duty of loyalty to John.

d.John did not agree to the transfer in ownership.

Adam and John owned AJ's Pizza. When they opened up the shop Adam spent $25,000 of his own money to buy the kitchen equipment they would need. John spent $5,000 of his money on rent and security deposit for the shop and $10,000 on advertising, website and office equipment for the business. Their goal was to share all profits and losses equally and also make all business decisions together and they never formalized any agreement between the two of them. They opened up the shop and things went very well for them. Before long they needed to buy a second oven and a second deep fryer. The two went to the bank together and applied for a small business loan on behalf of AJ's so they could purchase the two items. The loan was approved for $15,000 and they bought the equipment for the shop. John and Adam had a disagreement about how AJ's was to be run. The disagreement eventually turned into such a stalemate between the two men that the business was rendered dead simply by their inability to make a decision on anything. If John sought a court order to terminate the business, what is the likely outcome?

Select one:

a.The court would terminate the business, order the assets and profits evenly split and debts split evenly and paid.

b.The court would terminate the business, order the assets split according to contribution and profits and debts split evenly.

c.The court would order them to mediation to work out their differences and the business would continue.

d.The court would award the business to Adam since he was the majority shareholder in the business.